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BMW, Daimler, And Volkswagen Pay Huge Price For Steel Cartel

Crime / Comments

Crime doesn't always pay.

It all started back in 2004 when Germany's biggest automakers – BMW, Daimler, and Volkswagen – met with steelmakers and other companies involved with the supply chain. They discussed uniform surcharges when purchasing steel and this, everyone, is called forming a cartel. And now all three automakers, who build the likes of the popular BMW X3, Mercedes GLE-Class, and Volkswagen Tiguan, are paying a significant price for doing so.

According to Reuters, they will pay a combined total of $110.84 million (100 million euros) for unlawful actions in relation to steel purchases. This multi-year long scheme finally came to an end in 2016. These unlawful prices eventually caught the attention of Germany's cartel authority and the investigation got underway. It does not appear the three automakers denied much of anything because they all accepted the fines.

2018-2020 BMW X3 Front View BMW
2018-2020 BMW X3 Driving Action BMW
2018-2020 BMW X3 Driver Area With Interior Lighting BMW

BMW will pay a total of 28 million euros, Daimler is forking over 23.5 million euros, while VW declined to comment on its fine, but simple arithmetic puts it at around 48.5 million euros. The cartel office claims the purchasing prices for long steel products, used to make crankshafts, gearwheels, and steering rods, account for less than 1 percent of a car's final value.

Still, this was clearly an unfair market practice and it affected many other smaller companies who also purchase steel in this form. Germany's big three automakers took advantage of their size and status to cut themselves better deals.

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Interestingly, Volkswagen not only stated it welcomed the end the cartel probe, but also the legal clarity it created. Still, meeting with steel suppliers to set market prices in one's favor does not exactly come across as being legal in the first place. The good news for these carmakers is that they can easily afford to pay the fines and, chances are, they won't engage in this practice again. But at the same time, it's disappointing to learn the three participated in the scheme to begin with.

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2016-2020 Volkswagen Tiguan Front View Driving
2016-2020 Volkswagen Tiguan Rear View Driving
2016-2020 Volkswagen Tiguan Steering Wheel
2018-2020 BMW X3 Driving Action
2018-2020 BMW X3 Driver Area With Interior Lighting
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